Using the MAO Formula to Know When to Make an Offer

In wholesaling and real estate investing, making offers can feel like a guessing game. You find a motivated seller, estimate a number, toss it out, and hope it sticks.

But hope is not a strategy.

If you want to avoid overpaying, protect your margins, and make real money in this business, you need a formula.

That’s where MAO comes in.

MAO = Maximum Allowable Offer. It’s the highest amount you can offer on a property and still hit your profit goals, factoring in repair costs, resale value, and your exit strategy.

In this post, we’ll break down:

• What MAO is (and isn’t)

• The full formula and how to use it

• How to get accurate numbers without overthinking

• Real-world examples of MAO in action

• Why most new investors get it wrong, and how to avoid those mistakes

What Is MAO, Really?

Your Maximum Allowable Offer is your financial safety line.

Go over it, and you risk losing money, or struggling to wholesale the deal. Stay under it, and you’ve built in room for profit, flexibility, and negotiation.

Think of it like this:

The seller’s asking price is their number.
MAO is your number.
You win when the deal lands between the two.

The Core MAO Formula (Wholesaler Version)

Here’s the basic formula used by thousands of successful wholesalers:

MAO = ARV × 0.7 – Repairs – Assignment Fee

Let’s break that down:

ARV (After Repair Value)

This is what the property would realistically sell for once fixed up and listed on the open market. It’s based on nearby comps (comparable sales), adjusted for condition, features, and market trends.

Example: Fixed-up homes in the area are selling for $250,000
→ That’s your ARV

The 70% Rule

Multiply the ARV by 70% (or 0.7) to leave room for flipper profit and holding costs. This is a rule of thumb, not a law, but it’s a great starting point.

$250,000 × 0.7 = $175,000

This means a flipper will likely pay no more than $175,000 for that property.

Subtract Repairs

Estimate the renovation cost required to reach that $250K resale value.

Let’s say the property needs $30,000 in work
→ $175,000 – $30,000 = $145,000

Subtract Your Assignment Fee

As the wholesaler, you want to make a profit too. Let’s say you’re aiming for $15,000.

$145,000 – $15,000 = $130,000 MAO

You should not offer the seller more than $130,000.

Why This Formula Works

This MAO approach ensures:

• The end buyer (flipper) still has room for profit

• Your margin as a wholesaler is preserved

• The deal works in today’s market, even with some unexpected hiccups

It aligns incentives and keeps you from overpaying just to “get the deal.”

When to Adjust the 70% Rule

The 70% rule is a general guide. In hot markets, cash buyers might accept tighter margins, and you can push up to 75–78% of ARV.

In cold markets, or with riskier properties, you might need to go as low as 65%.

Let your buyer list help guide this. Use Goliath Data to track what buyers are actually paying in your zip code, not what they say they want.

The #1 Mistake New Realtors Make With MAO

They guess.

They hear a seller’s asking price, eyeball the numbers, and shoot from the hip.

“Well… they want $180K. I think I could sell it for $200K. That’s close enough, right?”

Wrong.

If your MAO is $130K, and you offer $160K because you’re afraid of losing the deal, you’ve already lost.

Without a formula, you’re flying blind and setting yourself up for:

• Tiny margins

• Dead-end deals

• Angry buyers

• Sleepless nights

How to Estimate Repairs (Without Being a Contractor)

You don’t need a license. You just need a system.

Use a Repair Cost Estimator

Plenty of wholesalers use rules of thumb:

• $15–25 per sq ft for cosmetic updates

• $30–50 per sq ft for moderate rehab

• $50+ per sq ft for full gut job

Or break it into categories:

• Roof: $8,000

• Kitchen: $10,000

• HVAC: $5,000

• Flooring: $3,000

• Paint: $3,000

Walk the property or look at pictures. Use conservative estimates. It’s better to overestimate repairs than go too low.

With Goliath Data, you can often spot red flags before you ever visit, like code violations, absentee ownership, or property age that suggests deferred maintenance.

Real-World MAO Example (Walkthrough)

Let’s say you’re evaluating a 1,200 sq ft rental in a landlord-heavy zip code.

• ARV: $240,000 (based on nearby comps)

• Repairs: $20,000 (kitchen, paint, carpet, minor roof work)

• Assignment fee goal: $10,000

Step-by-step:

1. $240,000 × 0.7 = $168,000

2. $168,000 – $20,000 = $148,000

3. $148,000 – $10,000 = $138,000 MAO

This means:

• You offer the seller anything under $138,000

• You assign the deal to a flipper for $148,000

• They rehab and resell for $240,000

Everyone wins.

When Should You Make an Offer?

If the seller’s price is:

• Well above MAO → Don’t offer yet. Ask more questions. Nurture.

• Within $5–10K of MAO → Make a soft offer and see how they respond.

• At or below MAO → Make the offer quickly and lock it in.

The timing of your offer is as important as the number itself. Don’t rush to pitch a number before you understand the motivation. Don’t wait too long if you’re close. Good deals move fast.

Use MAO Ranges for Better Negotiation

Don’t lead with your exact number.

Instead, give a range:

“Based on other properties we’ve done in the area and the condition you described, we’re probably somewhere in the $120–$130K range.”

This gives you room to:

• Gauge their reaction

• Negotiate within a safe zone

• Adjust slightly based on the condition walkthrough

If they say:

“I wouldn’t take less than $135K…”

And your MAO is $130K? You’re close enough to keep working the deal, especially if repairs were overestimated or you can take a smaller fee.

What If Your MAO Is Too Far Off?

Don’t throw the lead away. Here’s what to do:

1. Ask more questions. Sometimes, pain reveals itself later.

2. Follow up. Their price may drop in 30 days.

3. Offer creative terms. Seller finance or subject-to deals can work even when MAO doesn’t.

But most importantly: don’t force it. The worst deals come from chasing a seller’s price instead of sticking to the math.

MAO Calculator Built Into Every Lead

Goliath users don’t need to guess.

Each seller lead comes with:

• AI-estimated ARV

• Nearby comp data

• Editable repair inputs

• Auto-calculated MAO and profit scenarios

You can tag leads as:

• MAO viable

• Needs motivation

• Outside range

This turns your lead list into a prioritized action plan, so you’re not just calling leads. You’re calling winnable ones.

Math Protects Your Margin

It’s easy to fall in love with a property.

But real estate is not emotional. It’s math.

The MAO formula gives you:

• Confidence when talking to sellers

• Clarity when running numbers

• Control over your deals and profits
  
  
  

So don’t offer based on instinct. Don’t guess based on the seller’s tone. And don’t hope the numbers work out later.

Run the formula. Stick to it. And let the math do the talking.